LAPORAN ARUS KAS - Metode Tidak Langsung

Summary

The video introduces the statement of cash flows and demonstrates how to prepare it using the indirect method. A cash flow statement reports cash receipts and payments during a period and is an integral part of a company’s financial statements under PSAK No. 2.

Purpose and usefulness

A cash flow statement helps users assess:

• The company’s ability to generate cash in the future.
• Its ability to pay dividends and meet its obligations.
• Why net income differs from net cash generated by operating activities.
• Cash and non-cash investing and financing transactions during the period.

Net income usually differs from operating cash flow because net income is prepared on an accrual basis, while a cash flow statement focuses on cash movements.

Cash, cash equivalents, and activity categories

For cash flow reporting, cash includes cash and cash equivalents. Cash equivalents are short-term, highly liquid investments that can readily be converted to cash, have little risk of value changes, and are generally close to maturity—typically three months or less.

As a result, the cash flow statement balance may differ from the cash account alone on the statement of financial position. Cash and cash equivalents should be considered together.

Cash flows are grouped into three categories:

1. Operating activities — The company’s main revenue-producing activities and other activities that are not investing or financing. Examples include receipts from customers and payments to suppliers, employees, and tax authorities.
2. Investing activities — Transactions involving long-term assets and investments. Examples include buying or selling property and equipment, purchasing or selling investment securities, and making or collecting long-term loans.
3. Financing activities — Transactions that change the amount or composition of equity and borrowings. Examples include issuing shares or bonds, repaying borrowings, and paying dividends.

A useful distinction: buying another company’s bonds is an investing activity, while issuing the company’s own bonds is a financing activity.

Indirect method: preparation steps

The instructor presents these general steps:

1. Determine the change in cash by comparing the beginning and ending cash balances in comparative statements of financial position.
2. Calculate net cash from operating activities, starting with net income and adjusting it to a cash basis.
3. Calculate net cash from investing activities and net cash from financing activities.
4. Add the three activity totals to find the period’s net increase or decrease in cash. Combine that change with beginning cash to obtain ending cash, then check the result against the ending cash-and-cash-equivalents balance.

The information needed includes a comparative statement of financial position, the current-period income statement, and additional relevant information about transactions.

Operating-activity adjustments

The examples illustrate the main adjustments used to reconcile net income to operating cash flow:

• Add back non-cash expenses, such as depreciation, because they reduced accounting income without using cash.
• Add back losses on asset sales and subtract gains when reconciling operating income, because the sale proceeds belong in investing activities.
• For working-capital accounts:
  • An increase in accounts receivable, inventory, or prepaid expenses generally reduces operating cash flow.
  • A decrease in those assets generally increases operating cash flow.
  • An increase in accounts payable generally increases operating cash flow.
  • A decrease in accounts payable generally reduces operating cash flow.

The underlying logic is to adjust accrual-based income for amounts recognized as income or expense that have not yet resulted in cash receipts or payments.

Illustrative examples

The instructor works through three examples of increasing complexity:

• A newly established company, using share issuance, a cash dividend, and a small set of balance-sheet and income-statement figures.
• A company in its second year, with depreciation, working-capital changes, purchases of long-term assets, bond issuance, and dividends.
• A later-year example involving asset sales and purchases, depreciation, a loss on equipment sold, bond repayment, share issuance, and dividends.

Across the examples, the same format is used: operating activities, investing activities, and financing activities. The ending cash balance is checked against the balance-sheet information.

Reporting method

The video notes that PSAK No. 2 recommends the direct method, while the indirect method is also permitted. This lesson focuses on the indirect method; the direct method is covered separately.

Speakers and sources

• Speaker: One instructor/presenter, who introduces himself as a lecturer discussing Intermediate Financial Accounting II.
• Sources referenced: PSAK No. 2 and the International Accounting Standards Board (IASB), in connection with cash flow reporting and the meaning of cash and cash equivalents.